Suntech Solar Strategic Analysis
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Transcript of Suntech Solar Strategic Analysis
Michael Camarena, Eric LeDuc, Teo Tertel
Company Profile
• World’s largest producer of silicon PV modules and solar panels– Suntech designs, develops, manufactures, and
markets solar power products– Applications include off-grid systems, homes, and
solar power plants• Mission
– Promote the global adoption of solar power
Company Profile
Strategic Intent
• Suntech’s top priorities– Superior technology and superior value– High quality, low cost solar solutions– Cost and scale leadership– Achieve grid parity
• Suntech’s goal is to drive the cost per watt of their solar panels below $1 by 2012
Brief History
• Founded in 2001 by solar Dr. Zhengrong Shi– Solar manufacturing in China was nonexistent
• Public traded company in 2005– Volatile oil prices fueled concerns for renewable
energy• 12 million panels in 80 countries
– Production capacity increased to 1400MW in 2010
Challenges
• Demand for their products exceeds their ability to supply due to capacity constraints
• Solar PV technologies are not commercially viable without government incentives
• Rapid technological advancements• Reducing downstream costs
External Environment
• Market Volatility– Industry wide shortage of polysilicon in 2008
• Industry Demand – Demand fluctuates with market prices
• Technological Uncertainty– No dominant technology
• Government Support– Crucial towards growth of solar energy output
Porters 5-Forces Model
Threat of EntryModerate
Threat of BuyersStrong
Threat of SubstitutesStrong
Threat of SuppliersStrong
RivalryStrong
Internal Environment
• Strong Market Growth Outlook• Leading Market Position• Leading R&D Capabilities• Quality Commitment• Strong Supplier Relationships• Broad Product Portfolio• International Management Team
Elements of Strategy
Arenas
Vehicles
Staging
Differntiators
Economic Logic
Where is Suntech Active?
• Design, Development, Marketing & Manufacturing of silicon based PV products
• Worldwide residential, commercial, industrial, and public utility applications and systems integration services
• Key solar energy markets– US, Germay, China, Australia, Spain, Middle East,
South Korea, Japan, Italy
How Will Suntech Get There?
• Focused efforts on internal developments– Increasing efficiency of manufacturing– R&D to increase cell efficiency– Cost reductions– Capacity expansion
• Strategic acquisitions & Joint Ventures
How Will Suntech Win?
• Product Differentiation– High conversion efficiency– Manufacturing quality– Warranty certified power output– Credit for customers
What’s Suntech’s Staging?
• Solar Cells->– Solar solutions: modules, systems, systems
integrations• Staggering Speed
– Production capacities have doubled every year since 2004
What’s Suntech’s Economic Logic?
• Heart of Suntech’s product strategy– Low cost & high conversion efficiency– Superior consumer value
• Focus on enduring capabilities– Leveraging low cost production– Creating scale economies– Rapid innovation
Corporate Strategy
• Corporate umbrella for over 36 different subsidiaries in operation– A result of strategic acquisitions and investments
• Strengthen Suntech’s position in vertical chain– Upstream: Key access to high quality supplies– Downstream: Systems integrations and project
development
Key Mergers & Acquisitions
• Aggressive targeting of suppliers and manufacturers of solar technology
• KSL-Kutler, increase expertise in manufacturing
• Luoyong China Silicon, secure silicon supplies for solar cells
International Strategy Analysis
• Operate manufacturing, distribution, and sales offices worldwide– HQs: Asia, America, and Europe
• Promote adoption of solar power
• Become energy leader in solar technologies– Requires converting global presence into a global
competitive advantage
International Strategy Analysis
• Adapting to local market differences– Building relationships with customer base – Distribution and subsidies
• Exploiting economies of global scale– Largest producer of silicon solar products– Spread fixed costs over a larger volume
• Exploiting economies of global scope– Deliver same quality and level of service
regardless of location
International Strategy Analysis
• Tapping optimal locations– Leverage locations with access to low cost
resources and clean energy mandates• Maximizing knowledge transfer
– 36 subsidiary organizations and 13 sales offices– Manufacturing and R&D locations in China
Cooperative Strategy Analysis
Partnerships & Alliances• Strengthen core business, solar developments,
enhance R&D, and secure supplies– University of New South Wales: solar cell efficiency– Calisolar Inc. to secure solar silicon manuf. facility– Secure development of smart panel technology
Recommendations
Expand Capacity, Reduce Supplier Dependencies• Demand continues to increase, as costs are
reduced and efficiencies increase• Rapidly expand into new facilities that generate
needed capacity and satisfy local requirements for government subsidies
• Acquire/Partner with silicon suppliers to reduce supply shortages and obtain cost advantages
Recommendations
Proactively Reduce Downstream Costs• Reach grid parity and mitigate risks of reliance
on government subsidies• Reduce downstream costs • Certified Value Added Resellers (VARs)
– Impose Guidelines, Create Incentives, Evaluation Criteria
Recommendations
Engage Stakeholders• Engage gatekeepers for new energy
infrastructure and government subsidies• Advocate renewable energy and committing
resources to gain favorable outcomes • Building brand awareness to increase visibility
and prepare for new customer markets
QUESTIONS?